The British high street is for sale. An unprecedented takeover frenzy is transforming ownership of major store chains in a madcap smash and grab raid by a new breed of venture capitalists and entrepreneurs.

Chains worth more than £3 billion have changed hands in the last three years, including Top Shop owner Arcadia, Harvey Nichols, Littlewoods, Oasis and Allders.

And bid battles are now raging over a host of household names. High-risk scraps to buy Safeway, Hamleys, Debenhams and Selfridges are just the half of it as the fight to control the high street nears boiling point.

Businesses such as WH Smith, Woolworths and even Boots are under the spotlight, while JJB Sports, Somerfield and Mothercare could all be taken private.

Some believe, however, that the opportunity to buy retail chains is coming to an end. While the talk is of deals, not that many have been agreed. Offers for JJB Sports by its founder, David Whelan, have been judged too low. Meanwhile bids for Austin Reed, the menswear chain, failed to get funding.

True, banks are getting nervous about forwarding funds to raiders, especially as many of them refuse to inject significant equity into deals. This, plus fears of a prolonged consumer downturn, could spell the beginning of the end for retail consolidation.

But most think there's still a long way to go. International investors, burned by the stock market, are keen to buy quoted UK shops and take them private. The trigger has been a dramatic undervaluation by the City of the retail sector, particularly its middle market. British consumers went on a massive spending spree but the City failed to see the value of many leading high street names.

Maybe that is not surprising. Richard Hyman, director at Verdict, the retail consultancy, said: 'Prices for food and clothes have remained the same or even fallen over the last five years. But chains' operating costs, particularly logistics and property costs, have risen sharply.' This, he argues, has squeezed profits so only those who can sell volume or carve out a distinctive niche survive.

The City gave up on retail as an investment. Its loss has been the gain of such entrepreneurs as Philip Green, Joseph Wan, who took Harvey Nichols private earlier this year, and the secretive Barclay twins, who recently bought Littlewoods.

Meanwhile faceless private equity groups are keen to entrust proven retail managers to run businesses which generate heaps of cash.

This is why rival venture capital outfits - Permira on one side and an alliance of CVC Capital Partners and Texas Pacific Group on the other - are fighting for Debenhams with walls of cash.

All buyers know that lucrative freehold property assets held by many retailers are key to these new deals. Sell property, for which there is an unquenchable demand from foreign investors and financial institutions, and not only can hefty dividends be paid to new owners but bank debt can be paid back swiftly.

With debt secured at interest rates last seen in 1958, suddenly there is a margin that can make risk takers even richer. Add in the prospect for an upturn in consumer confidence in 18 months' time, and now has never been a better time to go shopping. So executives at some leading retailers are asking themselves whether they are for the chop.

WH Smith is the leading candidate. 'Everything it does can be done by supermarkets who are now, in effect, department stores,' said a leading retail analyst.

The chief executive of a leading high street firm said: 'You've got to ask yourself what is their future? They could retain some shops in key sites as specialised book stores. The rest could be sold.'

WH Smith, which named the current Argos managing director, Kate Swann, on Friday as its new chief executive, is about to lose chairman Martin Taylor through ill health.

Since the bid for Safeway emerged last January, many have wondered whether Boots the Chemist could be swallowed by a rival, a foreign buyer or a financial predator. Although Boots is still a high street mainstay and is, with Marks & Spencer, the most trusted British retail brand, its market share is being relentlessly squeezed by supermarkets.

Its expansion into health and beauty services, and overseas, have failed, but it has an untapped £800 million property portfolio. No decision will be made on whether to sell this until the new bosses are installed later this year.

Any deal for Boots from a supermarket would be examined by the competition authorities. However, a financial buyer with £6bn could break up the business.

Yet most retail players would be amazed if Boots was bid for yet. 'It's too big to swallow,' said a leading executive. 'And I think the City are prepared to give the new management a year to see what they can do.'

Somerfield has already been at the centre of bid activity. An offer at 120p a share from John Lovering was rejected last month. It has now emerged that Gareth Jones, the former Abbey National executive, is poised to take the chain private aided by the US private equity fund Global Innovation Partners and Calpers, the US pension fund.

It is understood that Jones's first bid, at 125p a share, was rejected but sources close to Jones indicated that a new offer will be tabled in 10 days once he returns from holiday. Somerfield revalued its property last week. The company now says it is worth £1bn, valuing the shares at 200p.

Negotiations for Selfridges and Debenhams are well advanced and there is even talk that Harrods could be on the market, although this is vehemently denied by its owner, Mohamed al-Fayed.

One thing is certain: the world's most famous toy shop, Hamleys, is set to change hands. Valuing the company at £63m, the Icelandic raider, Baugur, looks set to defeat rival Tim Waterstone, who founded the eponymous bookshop chain. Rhys Williams, retail analyst at Seymour Pierce, said this fight boiled down to 'a clash of two egos'.

Baugur, whose name appears on the share registers of many of Britain's top retailers, needs a deal to make its mark. It made a vast fortune with its 20 per cent holding in Arcadia. Along with Philip Green, Baugur was first to spot the opportunities in British retail. And the buying spree now resembles Hamleys at Christmas. But will these toys prove dangerous?